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Central America in midst of growth period
Hotel & Motel Management / June 16, 1997

By Larry Luxner

From the signing of a peace treaty that ends 36 years of civil war in Guatemala, to an anticipated tourist boom in Panama pending the return of the Panama Canal in 1999, Central America's hotel industry appears poised for sustained growth.

Perhaps the region's best-known tourist destination is Costa Rica, which is the most prosperous of Central America's six Spanish-speaking republics (along with English-speaking Belize). Yet Costa Rica's tourism industry, which has enjoyed double-digit growth for the past decade, is leveling off and appears "on the verge of a slump," says Central America Report.

According to Costa Rican government statistics, tourist arrivals jumped from 277,900 in 1987 to 784,600 in 1995. But estimated income from touristm, which had reached $679 million in 1994, fell 2.6% to $661 million in 1995. Rising crime and poor roads have been blamed for the drop. Some 45% of all tourists to Costa Rica are U.S. or Canadians, while another 28% are Central Americans and 17% Europeans. In 1995, more than 70% of tourists arrived by plane, with the average stay 10.3 nights at $93 a day.

Despite the slight downturn, Tourism Minister Carlos Roesch says room capacity in 1996 has increased by 25% to about 25,000. Last October, Marriott International inaugurated its 252-room Costa Rica Marriott Hotel & Resort, a luxurious property surrounded by coffee plantations and guarded by cobblestone gates.

Marriott is also active in Panama, where it's constructing a 160-room, five-star property to open early 1998 in the heart of Panama City's financial district.

While Panama has always attracted more business than leisure travel, this could change once the former U.S. Canal Zone reverts to Panamanian control on Dec. 31, 1999. Squeezed between the Atlantic and the Pacific, the so-called "reverted areas" contain an estimated 4,850 buildings and military bases, many of which front the Panama Canal and sit on prime real-estate. Last year, Fort Espinar was inaugurated as the site of the new Latin American Hotel and Tourist Management College. Another likely tourist lure is Gamboa, just 18 miles from Panama City and 20 miles from Colón.

Hotel construction is also picking up in the rest of Central America. The government of El Salvador recently issued a foreign government tender to build, maintain, administer a hotel on 20,000 square meters of land near San Salvador International Airport.

Ricardo Martínez, director of the Honduran Tourism Institute, says his country aims to build 2,000 more hotel rooms in 1997. The investment will be used in several hotel projects on the Caribbean coast, especially on the island of La Bahia, which in 1996 received everyone from Julio Iglesias to Argentine President Carlos Menem.

But the region's biggest potential draw is Guatemala, whose 10 million inhabitants also make it Central America's most populous country. The country's wide appeal -- from the Mayan ruins at Tikal to the colonial splendor of Antigua -- have sparked a hotel boom that can only be helped by the recent signing of a peace treaty between the Guatemalan government and rebel groups whose fighting had kept people away from the country.

Last November, Hyatt International opened its two-tower, 400-room Hyatt Regency Guatemala; the hotel is part of the new Tikal Futura complex. An Inter-Continental is also under construction and scheduled to open in 1998, while Choice Hotels International opened a $16 million Clarion and Radisson recently took over a hotel in Antigua.

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